Activities across the three main capital markets in Nigeria recorded robust performance during the first quarter of the year.
At the official close of the quarter on March 28, 2025, the markets reported a total valuation of N203.52 trillion, with the Nigerian Exchange Group contributing 57 percent amounting to N115.56 trillion, driven by investor interest in banking stocks.
The FMDQ Debt Market accounted for 41 percent or N84.64 trillion, reflecting its dominant role in fixed-income securities. Meanwhile, the NASD OTC Securities Exchange, which caters to unlisted securities, held a 2 percent share with a market capitalisation of N3.32 trillion, with a 10.44 percent increase as of Q1 2025.
Analysts have attributed growth recorded during the period under review to various factors, even as they expressed confidence in the continued growth in the market in the year.
The optimism is based on the expected influence of the CBN driven regulatory reforms on banking stocks, efforts by the Securities and Exchange Commission push for transparency in the market and the planned listing of the nation’s major oil and gas firms, the Nigerian National Petroleum Company Limited and Dangote Refinery, a fit bound to significantly impact the market capitalisation and liquidity positively.
NGX records 2.66% growth in Q1
Despite what some market analysts described as minor correction, the Nigerian capital market exhibited a strong performance in the first quarter (Q1) of 2025 as the Nigerian Exchange Group (NGX) recorded a year-to-date (YTD) gain of 2.66 percent.
Amidst broader negative market sentiment, particularly in March, the NGX benchmark index, the All-Share Index (NGX ASI) rose from 102,926.40 points on December 31, 2024, to 105,660.64 points as of March 28, 2025.
A breakdown of the monthly performance shows that in January, the NGX ASI increased by 1.53 percent, rising from 102,926.40 to 104,496.12 points. February saw a more substantial gain of 3.09 percent, closing at 107,723.22 points, but it nosedived in March, as the index dropped 1.91 percent, bringing the index down to 105,660.64 points as of the end of the first quarter of 2025.
The banking sector dominated performance in Q1 2025 as it got a spark of investor’s interest, leading to a 6.96 percent increase.
During this period, banks stocks witnessed a rally as the listed fresh capital reinforcing market confidence and driving sectoral growth. This resulted in broader market uptrend.
In addition, some major banks reinforced investor confidence with strong dividend declarations as ZENITHBANK, UBA and GTCO proposed a dividend payout of N4.00, N3.00 and N8.03 per share respectively.
Analysts have also identified the moderation in inflation to 23.18 percent in February 2025, down from 24.48 percent in January 2025 and 34.8 percent in December 2024, as a key factor that boosted investors’ sentiment towards the market during the period.
However, the market witnessed some pullback in March, but analysts remain cautiously optimistic about the outlook for Q2 2025. Key factors expected to drive sustained market momentum include continued strong dividend payouts, greater clarity on banking recapitalisation, and easing inflationary pressures.
Nevertheless, several risk factors could impact market performance in the coming months. Monetary policy adjustments by the CBN, particularly in response to inflation and exchange rate stability, could influence investor sentiment.
External economic conditions, such as tariff policies and advancements in technological innovation, may have significant implications, especially for the consumer goods sector. Additionally, energy transition policies could significantly reshape market dynamics, affecting industries that rely heavily on fossil fuels.
Furthermore, government policies and foreign trade agreements may alter household spending patterns, potentially influencing demand across various sectors. Foreign exchange volatility remains a critical factor, with potential implications for capital inflows, corporate earnings, and overall market stability.
While these uncertainties persist, analysts expect that sector-specific growth drivers, and a gradual improvement in macroeconomic conditions, will support market growth in the second quarter (Q2) of 2025.
NASD maintains growth momentum
The NASD OTC Securities posted 10.44 percent growth in the first quarter (Q1) 2025 as the NASD Securities Index (NSI) closed at 3,316.81 points on March 28, against the year’s opening at 3,002.68 points on December 31, 2024, reflecting a strong performance in the first quarter.
Performance breakdown shows that in January 2025, the NSI grew by 3.87 percent, rising from 3,002.68 to 3,118.81 points. In February 2025, the index experienced a further increase of 5.66 percent, closing at 3,295.32 points. In March 2025, the NSI saw a modest growth of 0.63 percent, reaching 3,316.17 points.
This consistent upward trajectory reflects growing investor confidence and more considerable trading activity on the NASD OTC market. Notably, in 2024, the NASD OTC Securities Exchange reported significant growth in key market indicators, with the NASD Securities Index and NASD Pension Index closing at 223.64 percent and 433.20 percent, respectively.
The sustained positive performance in Q1 2025 underscores the market’s resilience and its pivotal role in facilitating capital formation and investment diversification.
Mutual funds
In the first quarter of 2025, Nigeria’s mutual funds sector exhibited varied performance across different fund categories, reflecting shifts in investor sentiment and broader economic conditions. The Money Market Funds reported a 31.83 percent increase, with Assets Under Management escalating from N44.23 billion to N58.31 billion. The attractive yields offered by money market instruments contributed to this significant growth.
The Equity-Based Funds had a modest growth of a 13.55 percent surge in AUM, rising from N1.73 billion to N1.97 billion. This sluggish growth is due to the bearish sentiment in the Nigerian stock market in Q1 2025.
The Dollar Funds declined by 11.48 percent, with assets under management (AUM) decreasing from N29.24 billion to N25.88 billion. This decline was attributed to the naira’s relative stability against the US dollar during the period, reducing the appeal of dollar-denominated investments.
Analysts anticipate continued growth in the mutual funds sector, particularly in money market and equity-based funds, driven by attractive yields and a possible recovery in the Nigerian stock market. Investors are advised to maintain diversified portfolios and stay informed about macroeconomic developments.
